Ship graveyard filling up as industry slowly withers

The owner of a mothball yard in the Netherlands is seeing business boom as more vessels
too expensive to run, or from defunct businesses, crowd into his port

By Jan Hennop / AFP, DORDRECHT, The Netherlands

Sun, Oct 14, 2012 - Page 14

Just outside the inland southern Dutch city of Dordrecht a strange scene meets the eye: steel superstructures of dozens of big and small ships rise like buildings from behind a line of trees.

Anchored in rows up to four deep, cargo carriers, tankers and barges registered in ports such as Gibraltar, Malta and Limassol quietly sway in Dutch Harbor, a mothball yard for ships waiting for a bargain buyer.

Nowhere is the evidence starker that global shipping has sailed into turbulent waters resulting from Europe’s debt crisis than here along a 400m pier — essentially a cheap parking space for ships too expensive to run or formerly owned by shipping firms that have gone insolvent.

“In the last few years our business has picked up substantially,” said Gerard Heuvelman, manager of the family-run port on the Dordtsche Kil, a tributary connecting two main southern Dutch arterial waterways.

In sharp contrast with Rotterdam, Europe’s busiest port, a mere 60km downstream, the 25 laid-up ships at Dutch Harbor — some weighing as much as 10,000 tonnes — lay silent, “crewed” by one or two watchmen to keep an eye on operations and security.

“At least half the ships here belong to firms that have gone bankrupt. The other half belong to companies that have no work for them,” Heuvelman told reporters.

“It has never been as bad as this,” added Carel van Lynden, an expert lawyer in the ship-brokering industry in Rotterdam. “Until 2008 things had been going well — everybody wanted a slice of the shipping industry pie during the boom times. Lots of orders were placed.”

“But because of first the financial crisis and now the euro crisis, less goods are being shipped and less ships are required. Many of the ships ordered when things were still going well are only being delivered now — basically there is a huge over-capacity,” Van Lynden told reporters.

The WTO last month slashed its global trade growth outlook for the year to 2.5 percent from a previous 3.7 percent, citing the eurozone crisis and weak growth in the US and China as key factors.

With the IMF likely to lower its own growth estimates for the global economy this week, also naming the eurozone crisis as a major contributor, the global shipping industry has been hard hit.

In Germany, which controls 40 percent of the global container shipping market, more than 100 shipping businesses have shut down and a further 800 are threatened with insolvency, Britain’s Daily Telegraph said in August.

Analysts at the London-based global shipping industry tracker Lloyd’s List Intelligence said that the number of idle container ships around the world has grown from 254 in August to 268 at the start of this month.

A report last month by the authoritative Institute for Shipping Economics and Logistics (ISL) in Bremen, Germany, said second-hand ships are being sold off at bargain prices because there are now so many on the market.

“Due to the continuing difficult market situation, especially for smaller units [ships] that have been displaced due to a cascade effect it is highly likely that this figure [from Lloyd’s] will increase in the coming weeks,” the Germany-based ISL added.

The Netherlands has always been seen as a haven for those quickly wanting to sell a ship to cover costs, because of the country’s unique maritime laws.

Public sales of ships are so popular here they are even called “Dutch auctions.”

So far, 12 foreign-flagged sea-going ships have been sold this way since the start of the year, Van Lynden said, but sales of ships are drying up.

Such is the glut of unused vessels that banks no longer consider it worth their while to sell ships to recover money from bankrupt companies.

“Many banks now put shipping companies in what we refer to as their ‘intensive care units’ where they keep the companies afloat rather that foreclosing on them,” as it is more cost-effective, Van Lynden said.

Back at Dordrecht’s Dutch Harbor, Heuvelman waved his arm in a wide arc at the abandoned, rain-swept vessels.